Humana Inc.
500 West Main Street
P.O. Box 1438
Louisville, KY 40201-1438
http://www.humana.com
news release
FOR MORE INFORMATION CONTACT:
Kristi Drablos
Investor Relations
(502) 580-3644
kdrablos@humana.com
Tom Noland
Corporate Communications
(502) 580-3674
tnoland@humana.com
Humana to Sell Workers' Compensation and Medicare Supplemental
Businesses
and Plans 4th Quarter Charge
- Part of company-wide focus on core business
- Proceeds used to reduce debt
- Evaluating goodwill associated with prior acquisitions
LOUISVILLE, KY - January 3, 2000 - Humana Inc. (NYSE: HUM)
announced today that it has reached a definitive agreement to
sell its wholly-owned subsidiary, PCA Property & Casualty
Insurance Company (PCA P&C) as part of a company-wide focus on
core managed care businesses.
Humana has agreed to sell PCA P&C to FolksAmerica Holding
Company, Inc. of New York, a subsidiary of Bermuda-based White
Mountains Insurance Group, Ltd., for $125 million in cash. The
proceeds of the sale primarily will be used to reduce debt. The
sale of the subsidiary is subject to standard regulatory
approvals and is expected to close in the first quarter of 2000.
PCA P&C was acquired by Humana in 1997 as part of its
acquisition of Physician Corporation of America (PCA). With the
integration of the former PCA's managed care operations
completed, Humana viewed the PCA workers compensation operation
as a non-core asset.
Humana has also reached a definitive agreement to sell its
individual Medicare supplemental business to United Teachers
Associates Insurance Company of Austin, Tex. The Medicare
supplemental product currently serves 42,000 members in 17
states.
"Humana has made measurable progress in the second half of
1999 in improving our profitability," said James E. Murray,
senior vice president and chief financial officer of Humana.
"The decision to sell the workers compensation and Medicare
supplemental businesses allows us to focus more effectively on
our core health insurance businesses."
Humana also announced it is evaluating the goodwill
associated with the company's prior acquisitions including the
1997 purchase of PCA. The company is likely to take a charge in
the range of $400 to $500 million in the fourth quarter ending
December 31, 1999, primarily as a result of its evaluation of
goodwill and a loss on the sale of PCA P&C of approximately $65
million pretax.
"Today's announcements are important steps toward improving
the quality of Humana's balance sheet and freeing cash to reduce
debt and take advantage of market opportunities," Murray said.
Humana Inc., headquartered in Louisville, Ky., is one of the
nation's largest publicly traded managed health care companies
with 6 million health plan members primarily in 15 states and
Puerto Rico. Humana offers coordinated health care through a
variety of delivery systems - health maintenance organizations,
preferred provider organizations, point-of-service plans and
administrative services products - to employer groups, government-
sponsored plans and individuals. Additional information about
Humana is available at http://www.humana.com.
This press release contains forward-looking information.
The forward-looking statements are made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act
of 1995. Forward-looking statements may be significantly
impacted by certain risks and uncertainties described in Humana's
Annual Report on Form 10-K for the year ended December 31, 1998
and in Humana's Quarterly Reports on Form 10-Q for the quarter
ended March 31, June 30, and September 30, 1999, all as filed
with the Securities and Exchange Commission.